With every passing year comes alterations to healthcare obligations for employers. In 2016, companies are looking to trim their expenses by allowing employees to take more of an active role in their coverage. Here’s a closer look at how health insurance will change this year and what businesses are doing to give workers a say in their benefits:
Affordable Care Act changes
In 2016, updates to the ACA will be even more important for organizations to follow as failing to do so could result in expensive penalties. First and foremost, the definition for a small employer has changed from companies with 50 or fewer workers to those with 100 or fewer if state legislation sees fit, according to The Protecting Affordable Coverage for Employees Act. This is a large alteration since it means these businesses – now considered applicable large employers – will have to provide coverage to 95 percent employees to be compliant with ACA regulations. Those employers with 50 or less workers do not have to provide insurance.
To avoid even more costly fines, ALEs must be sure to offer both minimum essential coverage and a minimum value plan for employees to choose from. The former is the basic plan employers can offer their workers. MEC programs must meet the IRS definition of affordability, meaning it doesn’t exceed 9.5% of an employee’s household income. Minimum value plans, on the other hand, require the employer to cover 60 percent of medical services.
In addition, 2016 brought about the inclusion of embedded maximum-out-of-pocket costs. Essentially, health care plans must cover benefits at 100 percent after workers meet their annual out-of-pocket limit. The maximum for this year is $6,850 for individual coverage and $13,700 for family insurance.
“Consumer-driven health plans are gaining popularity.”
Transitioning responsibility from employer to employee
Companies across the country are searching for ways to reduce their health care costs. Many businesses have decided to implement coverage that shifts more of the financial responsibility to employees, while also giving them more decision-making power when it comes to their benefits. Consumer-driven health plans are high-deductible offerings coupled with a tax-deductible health savings account. This option allows workers to shop around for coverage that suits their needs before making their final decision. In addition, people get to decide how much money to set aside, how to spend those funds and are able to rollover any unused money, according to The Mayo Clinic.
Businesses are introducing these options since they enable employers to cut healthcare costs per employee, while providing ACA-compliant plans and giving workers the freedom to choose their own coverage.
Every year brings its own slew of changes to federal healthcare regulations and requirements for employers. In 2016, the ACA offered some important alterations affecting small-business owners and their insurance offerings. In addition, shifting financial accountability is a trending decision for many companies as they transition to consumer-driven health plans. It’s important for human resources and payroll teams to be aware of these adjustments and how they affect their annual filings and responsibilities.